Overstock.com 2012 Annual Report Download - page 61
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Table of Contents
The following table reflects our net revenues, cost of goods sold and gross profit for the years ended December 31, 2011 and 2010 (in thousands):
Gross margins for the past eight quarterly periods and years ending December 31, 2011 and 2010 were:
The decrease in direct gross margin for the year ended December 31, 2011 is primarily due to fixed costs increasing as a percentage of revenue due
to declining direct sales, higher inbound and outbound freight and higher product costs from returned goods due to a sales mix shift to the home and
garden category.
The decrease in fulfillment partner gross margin for the year ended December 31, 2011 is primarily due to competitive pricing initiatives. The
decrease in fulfillment partner gross margin for the three months ended December 31, 2011 is primarily due to competitive pricing initiatives, partially
offset by a decline in credit card processing fees.
The shift of business between direct to fulfillment partner (or vice versa) is an economic decision based on the economics of each particular
product offering at the time and we do not have particular goals for "appropriate" mix or percentages for the size of either. We believe that the mix of the
business between direct and fulfillment partner is consistent with our strategic objectives for our business model in the current economic environment
and, with the exception of a transition of some of our direct clothing and shoes category to a fulfillment partner model to reduce our seasonal inventory
risks, we do not currently foresee any material shifts in mix.
During reviews of our partner billing system for returns, we discovered that we had under billed our fulfillment partners for certain fees and
charges related to returns of approximately $157,000 and
52
Revenue, net
Direct $ 163,609 $ 209,646 $ (46,037) (22.0)%
Fulfillment partner 890,668 880,227 10,441 1.2%
Total net revenues $ 1,054,277 $ 1,089,873 $ (35,596) (3.3)%
Cost of goods sold
Direct $ 149,660 $ 187,124 $ (37,464) (20.0)%
Fulfillment partner 725,529 713,109 12,420 1.7%
Total cost of goods sold $ 875,189 $ 900,233 $ (25,044) (2.8)%
Gross Profit
Direct $ 13,949 $ 22,522 $ (8,573) (38.1)%
Fulfillment partner 165,139 167,118 (1,979) (1.2)%
Total gross profit $ 179,088 $ 189,640 $ (10,552) (5.6)%
Direct 10.7% 9.6% 6.6% 7.0% 8.5%
Fulfillment Partner 20.7% 18.1% 17.6% 17.8% 18.5%
Combined 18.9% 16.9% 16.0% 16.2% 17.0%
Direct 13.8% 11.7% 9.1% 9.0% 10.7%
Fulfillment Partner 18.8% 19.4% 18.7% 19.0% 19.0%
Combined 17.9% 18.0% 16.9% 17.0% 17.4%